It is not uncommon for homeowners in Tennessee to have both first mortgages and second mortgages on their homes. The presence of a second mortgage can at times leave consumers wondering about their options when they find themselves faced with serious debt problems. When contemplating filing for bankruptcy, some people may want to try and save their homes yet also want to get out from under a mound of unmanageable debt.
As explained by the San Francisco Gate, a home might be able to be saved in a Chapter 7 bankruptcy but in many situations, it is a Chapter 13 bankruptcy that ends up being the better option for homeowners who want to keep their houses. Depending on how a second mortgage is classified, it may even be able to be released during a Chapter 13 bankruptcy. The biggest factor in determining whether or not a second mortgage can be released is if it is considered secured or unsecured credit.
If a second mortgage is deemed to be unsecured, then it may be able to be released via the bankruptcy process. The United States Courts indicate that in a Chapter 13 bankruptcy, some debts may be consolidated for a structured repayment.
First mortgages are not generally included in the repayment plan of a Chapter 13 bankruptcy. Instead, the 36-month to 60-month period of a Chapter 13 is designed to allow the homeowner the chance to get caught up on any past due amount and to become current on their mortgage payments so that once the bankruptcy is complete, they are on a better financial path.